Tennessee Couple Gets $5,000 Loan, 59% Interest Rate

By Lucy_BaylyApril 20, 2009

Kay and Lewis Brown wanted some quick cash so they could make a moderate addition to their home. They turned to CashCall, an online loan service, after seeing the ads on TV. The company lent them $5,000 — at 59% interest. Now the couple is on the hook for $20,830.

The Browns claim they were never told anything about this extortionate rate and are seeking legal action. “I ain’t got no knowledge of spelling and writing, but the Lord gave me a good memory,” says Kay Brown. “And I know they never said anything about 59 percent interest.”

If you’re wondering why they didn’t read the fine print — well, it’s because they can’t read or use a computer, and were told by CashCall to have a friend help them apply for the loan on CashCall’s website.

“I don’t know how to operate one, because I can’t read or spell,” says Brown.

Thus began a series of unfortunate events. First, CashCall talked the Browns’ nephew through the process — which they thought was only an application and not a binding agreement. Then, CashCall sent them more money than they requested. $3,000 more.

Finally, the Browns say that the interest rate was never disclosed.

“There’s no way they would have accepted that loan with those terms,” Ms. Brown’s adult son told the local paper.

The couple has been making the payments faithfully all this time, and have paid back the principal of the loan — only to find out that they owe more than $15,000 in interest. They now have a lawyer and are suing CashCall. They’re also hoping that the state will bring criminal charges against the company for using “straw man” lenders in South Dakota to skip around Tenneesee’s 7.25 interest rate cap.

“They’ve attempted to circumvent Tennessee law,” says Doug Rose, an attorney with the law firm of Stone and Hinds, which has filed a lawsuit on Brown’s behalf in the General Sessions Court for Knox County.